United States annual budget deficit forecast to hit $1 trillion

Deficits will top $800 billion this year and will reach $1 trillion by 2020, just as President Trump prepares to face voters in his bid for re-election.

"Turning to the budget projections, we estimate that the 2018 deficit will total $804 billion, $139 billion more than the $665 billion shortfall recorded in 2017".

While the deficit is on the rise, Congress doesn't seem to be likely to cut spending. That means the CBO will be forecasting higher revenue levels near the end of its 10-year forecast, even though it's politically unlikely that those phaseouts will be allowed to occur, Collender explains. But there was a reason for that - from 2009 to 2012, deficits were above $US1 trillion as the government grappled with recession, the fallout of the GFC and a stuttering recovery.

At a news conference Monday, CBO Director Keith Hall said the increase "stems primarily from taxes and spending legislation enacted since then, especially the 2017 Tax Act, the Bipartisan Budget Act of 2018 and the Consolidated Appropriations Act of 2018".

No matter what the economic indicators imply, the Trump administration doesn't hesitate from making wildly exaggerated claims, as the White House spokesperson Raj Shah said on Fox News that the Trump budget "has over $3 trillion dollars in deficit reduction, which is the largest deficit reduction of a budget in terms of a 10-year outlay that we've ever seen". "That percentage would be the largest since 1946 and well more than twice the average over the past five decades", CBO says. Trillion dollar deficits were not set to return until fiscal 2022 under last June's assumptions. If the USA recovery becomes a slow down, then debt and deficit will rise even faster.

"This high and rising debt matters because it harms our economy, by crowding out public and private investment, reducing our fiscal flexibility, and lowering confidence and certainty".

"During a time of low unemployment and economic expansion, we should be taking reasonable steps to put our debt on a sustainable path - but instead we are piling up trillions of bills that will harm the next generation's economic prospects and prosperity", said Foundation CEO Michael A. Peterson.

In Monday's report, the CBO report included eight other professional estimates of the tax law's effects in its report. That means the CBO has to assume the unlikely event of deep cuts to discretionary spending.

Neither party actually wants to implement deep cuts to these programs (despite all the hot air from republicans and groups such as the Tea Party and Donald Trump).

Republicans, who powered through massive tax cuts and then cut a deal with Democrats to surge spending, were mostly silent on the numbers.

However, the non-partisan CBO said the deficit - the difference between what the government spends and what it receives through tax receipts - is expected to rise to $804bn in 2018 from $665bn in the previous year.

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